In the second half of 2022, the operation improved month-on-month, and the group restrictions improved to some extent in 2023, maintaining the "buy" rating.
On January 16, the company issued a profit warning: year-on-year net profit in 2022 dropped 60% to 70%, mainly for two reasons: (1) the revenue side declined. Although the formula granule business showed a positive growth trend in 2022, due to the high 2021Q4 base (sufficient terminal inventory reserves), 2022Q4 revenue is expected to decline significantly compared with the same period last year. (2) as a result of the impact of non-operating profit and loss, the company expects to provide for 216.6 million amortization of intangible assets for the whole year and provision for impairment of assets in the second half of the year, resulting in a decline in the profit side is expected to be significantly higher than the decline in income. however, we expect the operating profit margin to improve in the second half of the year compared with the first half of the year. Considering the insufficient variety of national and provincial standards published and filed in 2022, and the limited terminal group, which affects the sales volume in 2022, we downgrade the profit forecast for 2022-2024. it is estimated that the net profit of the company from 2022 to 2024 is 6.62 billion yuan (originally 21.86) / 11.63 (26.20) / 15.95 billion yuan respectively, and the corresponding EPS is 0.1ram 0.20.3 yuan per share. The current stock price corresponds to 25.4 PE 14.5 pound 10.5 times. Chinese traditional Chinese medicine actively carries out the national standard variety filing, which is expected to give priority to the industry expansion and maintain the "buy" rating.
The national standard is expected to add 48 in the short term, and the company's formula granule business has been improved to a certain extent under the restrictions of the organization.
As far as the current time is concerned, we think we can pay more attention to the traditional Chinese medicine formula granule plate. In 2022, due to the insufficient number of national and provincial standards and the high base number of 2021Q4, the performance of relevant enterprises is expected to be greatly affected. Looking forward to 2023, in the short term, with the increase in the number of filings, the formula granule business in 2023 is expected to achieve better recovery growth (especially 2023Q1 is expected to achieve rapid growth). In the medium and long term, the core driving force of formula granule business development is the release of national standard varieties and the progress of landing. On January 6, 2023, the State Drug Administration issued drug standard promulgation documents to receive information (including 48 GB varieties). We expect that the number of GB released varieties can be increased by 48 in the short term, and after the release, the company is expected to be restricted by the organization to a certain extent.
The State Drug Administration strengthens the supervision of the industry, and the competitiveness of leading enterprises is highlighted.
We believe that with the increase in the number of standards and stricter supervision in various places, the industry will return to standardized competition. At this time, the competitiveness of leading enterprises with the advantages of upstream raw material production layout, sufficient production capacity and more record varieties will be highlighted.
Risk tips: filing to promote the risk of affecting the progress of sales; traditional Chinese medicine formula granule industry competition aggravates the risk.